New Income Tax Bill

The New Income Tax Bill has been approved by the Union Cabinet led by Prime Minister Narendra Modi. This bill is set to replace the Income Tax Act of 1961. Its introduction is expected during the upcoming Budget session in Parliament. The aim is to simplify direct tax legislation, reduce uncertainties, and minimise legal disputes. Finance Minister Nirmala Sitharaman has stated that the new bill will present tax laws in a clear and concise manner.

Objectives of the New Income Tax Bill

• The primary goal of the New Income Tax Bill is to make tax legislation more accessible.
• It seeks to simplify the language used in tax laws.
• This will help ordinary citizens understand their tax obligations better.
• The bill intends to reduce the length of the existing legislation by half, aiming for clarity and ease of comprehension.

Structure of the Current Income Tax Act

• The Income Tax Act of 1961 currently consists of 298 sections divided into 23 chapters.
• Over the years, various taxes like wealth tax and gift tax have been removed.
• The Act has undergone numerous amendments, making it increasingly complex.
• The new legislation aims to eliminate outdated sections and present a streamlined version of the tax code.

Need for Modernisation

• The current Income Tax Act was established in a different era, reflecting the economic conditions of the early years of India’s republic.
• Since then, changes in society and technology have occurred.
• The existing law has become convoluted due to continuous amendments.
• A comprehensive review is necessary to align the tax system with modern practices, including digital filing and data integration.

Revenue Neutrality of the New Bill

• The New Income Tax Bill is designed to be revenue-neutral.
• This means that it will not impose a higher tax burden on citizens.
• The focus will be on simplifying compliance and clarifying tax obligations rather than changing tax rates.
• Any adjustments to tax rates will continue to occur through the annual Finance Act.

Expected Benefits for Taxpayers

• Taxpayers can expect clearer guidelines and a more straightforward filing process.
• The bill aims to lower the number of disputed tax demands.
• By reducing the complexity of the tax code, the government hopes to encourage a better understanding of tax responsibilities among citizens.
• This should lead to increased compliance and fewer legal disputes.

Month: Current Affairs - February, 2025

Category: Economy & Banking Current Affairs